Canada’s main stock index climbed on Friday, breaking a run of negative sessions earlier in the week, as strength in the technology sector and a pullback in oil prices lifted sentiment.
The S&P/TSX composite index rose 191.21 points to close at 35,697.49.
“We’re still constructive on the equity market, but I do think the catalyst today is definitely oil falling and stocks rising,” said Brianne Gardner, senior wealth manager of Velocity Investment Partners at Raymond James Ltd.
The October crude oil contract fell US$2.43 to US$100.05 per barrel, retreating after breaching the US$100 mark a day earlier amid the ongoing conflict between the U.S. and Iran.
Gardner said the Canada-U.S. trade dispute has remained a top concern for investors. The trade conflict entered a new phase on Tuesday when the Canadian government introduced retaliatory tariff measures in response to earlier U.S. tariffs. In turn, U.S. President Donald Trump signed executive orders to fully bar imports of certain Canadian goods, set to take effect later this month.
“Ottawa has so far signalled a measured response to the latest U.S. trade restrictions. I think all eyes are really shifting towards domestic investment,” Gardner said.
Prime Minister Mark Carney is set to host his Canada Investment Summit in Toronto starting Monday, a two-day event aimed at helping generate $1 trillion in total investment in Canada over the next five years.
Also on Monday, Statistics Canada is scheduled to release its consumer price index data for August. A Reuters poll of economists cited by LSEG Data & Analytics expects annual inflation to have held at three per cent last month.
Gardner said the inflation reading could influence expectations for interest rate moves. “If inflation comes in hotter than expected, markets could certainly further reduce their expectations for monetary easing and Canadian bond yields could move higher. That’s potentially negative for sectors like utilities, telcos, REITs, and other rate-sensitive equities,” she said, adding that a lower-than-expected reading “would give those areas some breathing room.”
In New York, major indexes also advanced. The Dow Jones industrial average gained 509.19 points to 52,573.29, the S&P 500 rose 65.28 points to 7,656.98, and the Nasdaq composite added 251.31 points to reach 26,333.04.
The gains came ahead of a U.S. Federal Reserve interest rate announcement scheduled for Wednesday. Inflation data released in the U.S. on Friday reinforced trader expectations that the central bank may feel pressure to raise its benchmark rate at the upcoming meeting.
Sébastien Mc Mahon, chief economist at iA Financial Group, described the stakes of the coming decision in stark terms. “Next week’s meeting is indeed huge. Don’t hike and risk a meltdown in the bond market. Don’t cut and risk a meltdown from President Trump, with geopolitical risks attached. Probably the most important Fed decision in recent history,” he said in a statement.
Despite Friday’s gains, Gardner said she was not altering her approach to the market given ongoing uncertainty. “It’s important to be very selective right now, being patient and making sure you have a diversified portfolio because we do expect to see some volatility in the short term ahead,” she said.
The Canadian dollar traded at 72.12 cents US, down from 72.35 cents US on Thursday. The December gold contract edged up US$1.60 to US$4,408.90 an ounce.
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